Markets Peak and Collapse

Markets rise into unsustainable tops and correct. It is comforting to believe every correction is a pause in a larger rally. However, stocks, bonds and commodities rise and sometime collapse. The “everything” bubble shows signs of a progressing crash.

Past examples of peaks and crashes from the last 40 years suggest caution with current markets.

Examine this graph from John Mauldin on Ten Year Interest rates. Each time the rate has reached the trend line, a crisis occurred. The 10 year rate at the end of March 2018 is 2.74%, well above the trend line.

THOUGHTS AND QUESTIONS

The current stock market rally will not last forever, and may be done.

Higher interest rates on LIBOR, Treasury Bills, Notes and Bonds are important. If the world has $230 trillion in debt and rates rise 2%, the annual INCREASE in interest payments is over $4 trillion. This hurts sovereign governments, individuals and corporations.

Central banks are not as powerful as many people believe. If they were so powerful, would crashes occur? Or are crashes planned? Would the financial crisis of 2008 have happened?

Massive global debt cannot rise forever. Official US national debt has risen about 8.8% per year since 1913. At that rate $21 trillion in national debt grows to $50 trillion before 2030. An average interest rate of 5% means interest only expenditures of $2.5 trillion per year on $50 trillion in debt for the US government.

Will the Fed “print” $3 to $5 trillion per year to cover the ever-increasing deficit? How much food, energy and silver will the mini-dollar buy in 2030 after that inflationary debt hits the economy?

Why have Russia and China accumulated so much gold?

Past collapses were 37% to 84%. Will this time be different?

WHAT COULD GO WRONG?

President Trump has appointed what people call a “war cabinet.”

Perhaps the powers-that-be will encourage a crash and blame it on President Trump.

North Korea, Ukraine, Iran and growing tensions with Russia.

Trade wars, currency wars and shooting wars.

Dollar weakness or dollar crash.

Rising interest rates create more bankruptcies, reduced resources for current spending and marginal businesses will collapse.

Confidence declines in government, the military, institutions, and currencies.

Social unrest.

WHAT CAN WE DO FOR FINANCIAL PROTECTION?

Buy silver and gold.

Avoid most stocks and bonds—they are late in the cycle. Risk is high.

Plan for another stock market crash, and trust it will be mild.

Plan for a correction in bond markets and currencies, and trust it will be mild.

BUY GOLD AND SILVER!

WHY BUY SILVER?

Silver prices hit a deep low of $4.01 in November 2001. That low is like $16 in March 2018. The St. Louis Federal Reserve states total U.S. debt securities increased from $16.7 trillion in 2001 to $44 trillion in 2018. Commercial banks and the Fed created an “extra” $27 trillion of DEBT. The piper must be paid… one way or another.

Silver is inexpensive, has thousands of industrial and medical uses, and has been valuable for several millennia. Much higher prices are coming.

WHY BUY GOLD?

Gold prices hit a deep low of $256 just before the 9-11 disaster. Spending, debt and craziness have exploded since then. A gold price of $1,320 in March 2018 is like $256 in 2001.

Miles Franklin can’t prevent the stock market from crashing, they can’t levitate the bond market and they can’t prevent a nuclear war. They sell silver and gold at excellent prices so you will be more secure while politicians and central bankers do what they will with stock markets, bonds, debt and nuclear weapons.

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